Arrest of former Puerto Rico governor may affect island politics

Bonds

The indictment of former Puerto Rico Gov. Wanda Vázquez on bribery charges damages the reputation of her political party, according to some analysts, but since her party is the only one advocating statehood for the island, the pain may be limited.

Still, the arrest should have no impact on how long the Puerto Rico Oversight Board will remain in place, analysts said.

Vázquez, governor from August 2019 to January 2021, and two others who were out of the country were allegedly involved in a bribery scheme. 

Two others — John Blakeman, who was involved in Vázquez’s campaign, and Frances Díaz a bank CEO — pleaded guilty.

Wanda Vázquez, shown when she was governor of Puerto Rico, was charged with accepting bribes but maintains her innocence.

U.S. Attorney for the District of Puerto Rico W. Stephen Muldrow said Vázquez could face up to 20 years in prison if found guilty.

A Venezuelan citizen who was a primary owner of a Puerto Rico bank offered Vázquez money to undermine an investigation of his bank. Vázquez allegedly accepted the offer and forced the leader of the agency overseeing the investigation to resign, replacing him with a person the banker suggested. 

The grand jury charged the former governor with conspiracy, federal program bribery, and honest services wire fraud. It charged the banker — Julio Herrera Velutini — and a consultant who helped arrange the deal — Mark Rossini — in connection with the bribery deal. They were not arrested Wednesday because they are outside the country, but the U.S. Department of Justice is seeking their extradition.

“We see once again that no one is above the law in Puerto Rico,” said Gov. Pedro Pierluisi. He acknowledged the arrest “certainly affects and lacerates the trust of our people,” but he pledged will work with authorities “as well as promot[e] initiatives and follow up on the bills that I have presented to combat corruption.”

Resident Commissioner Jenniffer González Colón said the accusation “against any public official is a despicable event that damages the trust of the people in its institutions and surprises and hurts even more if the accused held the highest government position on the island.”

Honesty and public service should be synonymous, she added, and anyone who uses public office “for personal gain has to be repudiated.”

Pierluisi beat Vázquez in the New Progressive Party gubernatorial primary election held August 2020. González Colón, who is Puerto Rico’s non-voting representative to Congress, is also a member of the New Progressive Party.

According to several news websites, Vázquez proclaims her innocence. 

While Vázquez is the first former governor to be indicted for acts while in that office, there has been a wave of arrests for corruption on the island over the last 12 to 18 months. Cataño Mayor Felix Delgado Montalvo, Humacao Mayor Reinaldo Vargas Rodríguez, Aguas Buenas Mayor Javier García Pérez, and Mayagüez Mayor Josê Guillermo Rodríguez have all been charged or found guilty during that period.

Most analysts said the charges against Vázquez would not affect how inclined the U.S. Congress would be to end the Oversight Board’s control. 

Cumberland Advisors Portfolio Manager and Analyst Shaun Burgess said, “I don’t believe this would impact the established duration of the oversight board.”

The board’s existence and sunsetting is based on meeting specified criteria “and as long as they meet that criteria, it should end as established by the legislation. Unfortunately, I don’t think this is serious enough to garner the political will to keep the Oversight Board in place.” Cumberland owns insured Puerto Rico bonds. 

University of Puerto Rico Political Science Professor José Garriga Pico said, “I am sure it will cause an impact on the ‘alert public’ in Congress and it should move them to doubt that Puerto Rico is ready to be liberated of the Puerto Rico Oversight, Management, and Economic Stability Act ‘ball and chain.'”

But, he added, many members of Congress will remain inclined to get rid of the board.

Oversight Board Member Justin Peterson said, “Removing the [Oversight Board] would require amending PROMESA. While I certainly would support this, nothing I’ve observed to date leads me to believe that Congress will do so in the near term.”

On the impact of the arrest on Puerto Rico’s politics Garriga Pico said, “This is another blow to the integrity of the NPP. It will deepen the public perception and feeling that it is a corrupt enterprise. It will lose [a] few followers to Citizens Victory Movement, mostly among the younger voters. But the older folks may prefer the conservative Dignity Project.”

But rather than defecting from the party, he said, the arrest will tend to alienate voters who will eschew the polls because they feel all politicians are corrupt.

“The very slim silver lining for the NPP is that it is occurring now, more than two years before the election,” Garriga Pico said. 

Attorney Phillip Escoriaza, senior counsel at Feldesman Tucker Leifer Fidell, said the left-leaning Citizens Victory Movement could pick up some supporters, as would some other minor parties. However, NPP supporters want statehood and the other parties do not advocate this, which will prevent the current embarrassment from leading to too many lost adherents. Escoriaza lived in Puerto Rico until recently and owns two homes there. 

Burgess said because corruption is so common on the island it is unlikely to push too many people away from voting for the NPP. ”Corruption has been one of the island’s biggest issues and I would expect to see more headlines like this if they are serious about creating real change and a brighter future for the commonwealth.”

“Gov. Vázquez is an individual and was an accidental governor who was never elected to office,” Peterson said. “I don’t think you can judge an entire political party according to these allegations against her.”

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